FTC: Pharmacy benefit managers inflated drug prices by $7.3 billion

WASHINGTON >> The nation’s three largest pharmacy benefit managers have significantly raised prices for some drugs, including for heart disease, cancer and HIV, at their affiliated pharmacies, the U.S. Federal Trade Commission announced Tuesday .

From 2017 to 2022, the companies – UnitedHealth Group’s Optum, CVS Health’s CVS Caremark and Cigna’s Express Scripts – raised prices at their pharmacies by hundreds or thousands of percent, bringing them $7.3 billion in revenue. higher than the acquisition costs of medicines. said the FTC in its second report on the industry.

“The $7.3 billion is the difference between what they reimburse themselves and what it would cost them to acquire the drug,” an FTC spokesperson told reporters during a press briefing, adding that this figure was “probably underestimated”.

Pharmacy benefit managers, or PBMs, act as intermediaries between pharmaceutical companies and consumers. They negotiate volume discounts and fees with drug manufacturers on behalf of employers and health insurance plans, create lists of drugs covered by insurance, and reimburse pharmacies for prescriptions.

The FTC prioritized testimony from drugmakers and pharmacies, industries that benefit from weakening PBMs, said David Whitrap, vice president of external affairs at CVS Health.

An Optum spokesperson said the company has reduced drug costs and helped patients save $1.3 billion in 2024.

A spokesperson for Cigna’s Express Scripts called the report’s findings misleading, saying the calculations are based on a subset of drugs that account for less than 2 percent of what our health plans spend on drugs in a year.

The report said distribution patterns suggest the companies were directing the most profitable prescriptions, those with markups exceeding $1,000 per prescription, to pharmacies owned by their parent companies.

They also paid these pharmacies more than unaffiliated pharmacies for almost all drugs in the study, the report said.

In 2021, patient out-of-pocket costs for these drugs were $279 million, a compound annual increase of 14% to 21% since 2017, according to the report.

The companies generated an additional $1.4 billion during the study period from tiered pricing — the practice of charging plan sponsors more than they reimburse pharmacies for drugs.

The FTC sued the three PBMs in September, accusing them of steering diabetes patients toward more expensive insulin products in order to reap millions of dollars in rebates from drugmakers.

The companies say the suit is without merit and defend their practices. CVS, UnitedHealth and Cigna in October asked the FTC to disqualify Chairman Linda Khan from the insulin lawsuit, citing alleged bias against their pricing model.

“We are confident that our actions will be upheld in the litigation, and we will not be distracted from our duty to inform the public and policymakers by the PBM’s scare tactics,” the spokesperson said Tuesday of the FTC.

Khan’s term as president officially expired in September. President-elect Donald Trump will be inaugurated on January 20 and has chosen current Commissioner Andrew Ferguson to succeed Khan.

The FTC spokesperson said he is confident that Ferguson and other Republican commissioners support the FTC’s work on PBMs.